Market Conditions – The Golden Week holiday created a temporary pause to the volume declines and subsequent rate freefalls the market has been experiencing over the last couple of months. Import volumes are expected to continue to drop, however ocean carrier blank sailings and service suspensions should help slow the decline, at least for USWC local port destinations.
Lower market levels over the next couple of months should help ease the continuing inland chassis crisis that is still plaguing destinations such as Dallas, Kansas City, Chicago, and Memphis. It will take time for any drastic improvement However, as warehouses inventory levels remain high forcing many importers to utilize containers and the attached chassis for storage. The slowdown in import volume may provide some light at the end of the tunnel as the declines in volume are really the only way for ports and railroads to recover from the overwhelming congestion and related supply chain issues.
Market Rates – Downward rate pressure continues with U.S. East Coast and inland rail destinations reflecting the largest percentage reductions as of this week. West Coast port rates plummeted over the last two months and are inching closer to the bottom as the incremental rate drop per 40’ container is now 2%-3% versus 5%-10% in weeks leading up to China’s Golden Week. We believe West Coast rates are getting closer to the bottom because independent carrier rate levels are now only slightly lower than the global carrier players. This is a clear signal freight rates are nearing or below compensatory levels for ocean carriers West Coast port rate levels.
Historically the gap between West Coast port rates and East Coast rates hovers around $1,000 per 40’ and USIPI approximately $2000+ per 40’ over West Coast rates. Unless ocean carriers announce a significant cut in capacity through winter programs, we expect rates will continue trending lower to USEC, Gulf and inland points through the fourth quarter.
Intermodal Congestion Continues – The drop in container volumes through the remainder of 2022 is expected to dramatically improve the inland availability of chassis we approach the first quarter of 2023., The lack of warehouse capacity that has plagued our industry is also expected to slowly improve as inventory levels trend lower and holiday sales fast approaching. The released capacity will allow for equipment turn times to improve over time. The logistical mess created by the pandemic is finally moving towards a brighter light at the end of the tunnel.
East Coast and Gulf Port Congestion – Savannah, Houston and New York continue to experience the majority of vessel berthing delays with approximately thirty vessels anchored off both Savannah and Houston while New York has recovered to less than 10 vessels at anchor. The berthing delays are adding an additional 7-10 days of transit on average unless your container is on an unfavorable port rotation. For example, a service calling New York, Norfolk, Savannah will add a substantial amount to the overall transit time upwards of 30 days.